Broker Action

Marathon Oil
MRO, -3.47%
was downgraded to "equal-weight" from "over-weight" by Lehman Bros., as the broker said it's losing its conviction that Marathon will be able to successfully turn around its upstream portfolio and operations. Marathon's substantial negative revisions on Russian and Powder River Basin assets raise questions about the overall upstream asset quality and execution ability, it added.

J.P. Morgan dropped its rating on satellite television provider EchoStar Communications Corp.
DISH, -3.12%
to "neutral" from "overweight," citing tempered expectations for growth from the SBC Communications, Inc.
SBC, +1.58%
joint venture. The broker told clients that recent comments suggest that subscriber growth "will likely be meaningfully slower" than it expected at EchoStar and that the company will face incremental investments for high-definition television (HDTV.) J.P. Morgan concluded that EchoStar should still deliver strong earnings-per-share growth and free cash flow over the next two years.

Merrill Lynch dropped its rating on Schering-Plough
SGP, +0.00%
to "neutral" from "buy," citing the drugmaker's inability to rule out future Vytorin or Zetia label changes. In addition, Merrill Lynch mentioned management's reluctance to issue any guidance and lower earnings-per-share assumptions. "We continue to believe that Schering-Plough's turnaround potential is significant, but given our current perception of the risks, we are no longer comfortable rating the stock a 'buy'," the broker told clients.

Diagnostic products maker Biosite
BSTE
was downgraded by Wachovia Securities to "market perform," with the broker citing in-line but lower quality fourth-quarter earnings and a new Food and Drug Administration hurdle or slower launch of its Cardiac Profiler panel. "With slowing BNP growth and no catalysts until mid-2005 FDA panels on Stroke and CP Panel, we see little to drive BSTE shares in the near term," the broker said.

Wachovia Securities and Merrill Lynch raised their rating on Integrated Device Technology, Inc.
IDTI, -2.42%
to "outperform" from "market perform" and to "neutral" from "sell," respectively. Wachovia said its checks suggest that "business has bottomed" and that job restructuring should result in "very compelling" earnings-per-share leverage. Merrill said it was upgrading its rating on the company due to cost savings expectations related to the restructuring. Merrill also noted that networking is "showing signs of life." The broker told clients that while it's not forecasting much top-line growth in the near term, "improving profitability and stable demand should keep the stock at current levels."

Wachovia Securities downgraded Direct General Corp.
DRCT
to "underperform" from "neutral," saying it will be difficult for the insurance and specialty finance company to maintain its premium multiple due in part to increasing competition. The broker told clients that growth looks less favorable as it sees increased competition in the non-standard auto market. Wachovia also pointed out the absence of brand recognition in Texas (Direct General's newest expansion state) and the fact that the company no longer writes new policies in Florida due to high fraud activity.

UPS
UPS, -0.01%
posted fourth-quarter net income of $866 million, or 76 cents a share, compared with $856 million, or 75 cents a share, in the year-ago quarter. On an adjusted basis, the company would have earned 82 cents a share. Revenue for the quarter rose to $9.84 billion, buoyed by strong double-digit growth in its international and non-package divisions and a 6.6 percent increase in its U.S. domestic operations. The Thomson First Call average estimate was for earnings of 76 cents a share on revenue of $9.76 billion. The Atlanta, Ga. parcel delivery company said it expects to first-quarter earnings to be in the range of 70 cents to 75 cents a share. For 2005, it still sees earnings per share growing 13 percent to 17 percent over its adjusted 2004 earnings of $2.90 per share. The current First Call average estimate is for first-quarter earnings of 75 cents a share and 2005 earnings of $3.37 a share. UPS shares ended down 0.8 percent, at $75.50 in trading Wednesday.

Amgen Inc
AMGN, -0.30%
reported fourth-quarter earnings of $689 million, or 53 cents a share, up from $547 million, or 41 cents a share, in the same period a year ago. Excluding non-recurring items, such as acquisition-related expenses, earnings would have been 58 cents a share, missing the average analyst estimate compiled by Thomson First Call of 61 cents a share. Revenue rose 24 percent to $2.9 billion from last year's $2.35 billion, topping analyst forecasts of $2.34 billion, amid 40 percent growth in Aranesp sales, a 7 percent increase in Epogen sales, 49 percent growth in Enbrel sales and 7.9 percent growth in Neulasta and Neupogen sales. The biotechnology company expects 2005 earnings of $2.70 to $2.85 a share, vs. the average analyst projection of $2.84. The stock closed Wednesday up $1.39 at $63.56.

Verizon Communications
VZ, -1.96%
reported fourth-quarter earnings of $3 billion, or $1.08 a share, double the $1.5 billion, or 53 cents a share, the telecommunications company earned in the same period a year ago. Excluding non-recurring items, such as gains from the sale of assets, earnings would have been 64 cents a share, matching the average analyst estimate compiled by Thomson First Call. Revenue was $18.3 billion, up 6.2 percent from last year's $17.2 billion and in line with analyst projections. Wireless division revenue rose 23 percent to $7.3 billion, contributing more than 40 percent of total revenue vs. less than 35 percent last year. The wireless division added 1.7 million customers during the quarter. The stock, a component of the Dow industrials, closed Wednesday up 52 cents at $36.52.

Rayovac Corp.
ROV, +0.40%
posted fiscal first-quarter net income of $27.9 million, or 79 cents a share, compared with $22.2 million, or 67 cents a share, in the year-ago quarter. Excluding a one-cent gain from the disposal of certain fixed assets, the consumer products group would have earned 78 cents a share. Sales for the quarter rose 8 percent to $490.8 million. The Thomson First Call average estimate was for earnings of 75 cents a share on revenue of $490.4 million. The Atlanta, Ga. company lifted its 2005 outlook, saying it now expects to earn in the range of $2.15 to $2.20 per share on sales of around $1.5 billion. The current First Call average estimate is for full-year earnings of $2.17 per share. Rayovac shares fell 0.2 percent, to $38.90 in trading Thursday.

Teledyne Technologies
TDY, -1.41%
reported fourth-quarter earnings of $13.4 million, or 39 cents a share, up from $7.8 million, or 24 cents a share, in the same period a year ago, and above the average analyst estimate compiled by Thomson First Call of 29 cents a share. Revenue rose 30 percent to $288.1 million from last year's $222.4 million, exceeding analyst forecasts of $271.6 million, boosted by 37 percent growth in its electronics and communications division. The company expects first-quarter 2005 earnings of 30 to 33 cents a share, above analyst projections of 26 cents, and 2005 earnings of $1.30 to $1.40, vs. analyst estimates of $1.31. The stock closed Wednesday up 77 cents at $27.50.

Colgate-Palmolive
CL, -1.27%
reported fourth-quarter earnings of $285.7 million, or 50 cents per share, including $48 million in restructuring charges. Excluding items, the company earned $333.7 million, or 59 cents per share, in line with the average estimate of analysts polled by Thomson First Call. Sales rose to $2.8 billion from $2.6 billion in the same period a year earlier. The stock closed Wednesday at $49.88, up 8 cents.

Quest Diagnostics Inc.,
DGX, -0.34%
a Teterboro, N.J., provider of diagnostic testing, information and services, reported fourth-quarter net income rose 16 percent on 6.6 percent higher revenue. Net increased to $126 million, or $1.20 a share, from $108 million, or $1, in the year-earlier period. Revenue climbed to $1.28 billion from $1.2 billion. Quest also said it expected 2005 earnings of $5.45 to $5.55 a share, 14 percent to 16 percent above the 2004 level of $4.77 before special charges. The 2005 estimate excludes the effect of an accounting change, effective in July, for equity-based compensation. Quest expects full-year revenue to rise 5 percent to 6 percent. On Wednesday, Quest shares rose 51 cents, or 0.6 percent, to $89.52.

Lockheed Martin Corp.
LMT, -0.45%
indicated that 2005 earnings would fall short of expectations as an increase in the adjustment of its pension plan and the inclusion of stock option expenses offsets increased volumes and the benefit of the early retirement of debt. The aerospace and defense contractor expects 2005 earnings of $3.05 to $3.30 a share, below the average analyst estimate compiled by Thomson First Call of $3.32. Revenue is anticipated to be $36 billion to $37.5 billion vs. analyst forecasts of $36.04 billion. For the fourth-quarter of 2004, the company reported fourth-quarter earnings of $372 million, or 83 cents a share, up from $344 million, or 77 cents a share in the same period a year ago, and above the average analyst estimate of 75 cents a share. Revenue rose 11 percent to $10 billion from last year's $9 billion, topping analyst forecasts of $9.2 billion. The stock closed Wednesday up 97 cents at $55.23.

Dow Chemical Co.
DOW, -0.88%
posted fourth-quarter net earnings of $1.026 billion, or $1.06 per share, up 10 percent from the $929 million, or 99 cents, earned in the final three months of 2003. The company's quarterly sales reached $10.936 billion, 31 percent higher than the prior year's $8.332 billion. On an adjusted basis, Dow Chemical earned 85 cents per share in the latest quarter. Analysts, on average, had been looking for earnings of 71 cents per share on revenue of $10.382 billion. The company cited double-digit price increases on a broad basis and wider margins as contributing to the profit improvement. For 2004, overall volume increased 6 percent, the company said. Shares of Dow Chemical added 3 cents to end at $48.74 in Wednesday's trading.

Anglo-Swedish pharmaceutical AstraZeneca
AZN, +0.56%
said it expects to report 2005 earnings per share in a range of $2.40 to $2.55, or between $2.35 and $2.50 on an IFRS basis. The company said the business remains robust and it expects continued sales progress. Adjusted earnings per share for the fourth-quarter came in at 59 cents, up from 38 cents a year ago, while adjusted full-year earnings were $2.11, up from $1.78 a year ago, and in line with analyst expectations. The company reported fourth-quarter sales of $5.799 billion, up from $4.875 billion at the same point a year ago, after sales for key growth products rose 30 percent to $11.2 billion. AstraZeneca raised its dividend by 18.2 percent to $0.94, while fourth-quarter adjusted pretax profit was $1.345 billion, up from $869 million a year ago. The company took a $71 million provision charge for Exanta in the fourth-quarter and a $85 million provision charge for lung cancer drug Iressa.

Philips Electronics
PHG, +0.05%
, Europe's largest electronics maker, posted a decline in net income to 498 million euros or 39 euro cents per share in the fourth quarter against 46 euro cents per share in the same period of 2003. Sales rose 2 percent to 9.179 billion euros; comparable sales rose 6 percent. Income from operations dropped to 14 million euros - ahead of some analyst estimates - amid a bevy of charges. In the fourth quarter of 2003, Philips saw a 608 million euro income from operations. Sales at Consumer Electronics, its largest division rose 11 percent on the 2003 quarter; semiconductor sales were down 7 percent on a comparable basis, due to lower sales at Mobile Display Systems.

Siemens
SI
said fiscal first-quarter net income climbed 38 percent to 1.001 billion euros, with sales easing to 18.16 billion euros vs. 18.32 billion euros from a year ago while orders climbed to 21.5 billion euros from 20.49 billion euros. Profits came in ahead of forecasts between 852 million and 930 million euros, while sales missed forecasts between 18.76 billion and 20.63 billion euros. The German conglomerate said strong earnings came from Automation and Drives, Medical Solutions, Power Generation, Siemens VDO Automotive and Osram divisions. It also cut its pension underfunding to 1 billion euros from 3.1 billion euros at the end of September. Looking forward, it said it expects higher revenue growth than a year ago, depending on exchange rate developments, and said its Siemens Business Services and mobile phone business need "additional measures."

The British Medical Journal (BMJ) has retracted allegations made in its Jan. 1 issue that Eli Lilly
LLY, +0.00%
had failed to disclose important information about its Prozac drug during a 1994 product liability suit. The BMJ apologized for suggesting the certain documents had gone "missing," saying that all documents had in fact been disclosed during the suit. "The apology and retraction is an important step in gaining closure on an unfortunate event," said Eli Lilly chairman Sidney Taurel. Lilly's stock closed Wednesday up 65 cents at $55.50.

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